Yellen, speaking at a news conference ahead of meetings with her G7 and G20 counterparts, said the U.S. and its allies were evaluating different options for some $285 billion in Russian assets immobilized in 2022 and the associated risks.
G7 leaders have asked for solutions to be presented in June.
Yellen acknowledged there were risks involved, but downplayed concerns raised by some in Europe that confiscating Russian assets would undermine the role of the U.S. dollar, euro or Japanese yen as important global reserve currencies.
“I believe the G7 should work together to explore the number of approaches that have been suggested for unlocking their economic values. One would be, of course, seizing the assets themselves, but there are other ideas, such as using them as collateral to borrow from global markets,” Yellen said.
She said she considered it “extremely unlikely” that any G7 move on Russian assets would result in a massive shift from currencies, given the uniqueness of this situation and what she called Russia’s brazen violation of international norms. The countries involved represented half the global economy, and any action would be taken in coordination, she said. “It’s important for the G7 to work together. We need to find a way that is legal, both domestically in all of our countries and also in accordance with international law,” she said.
“We don’t have a preferred strategy for how to do this. We want the G7 and our allies to act together,” she said.
Yellen said there was a countermeasures theory that she felt had strong justification in international law, and if that was the justification chosen, all the measures would have to be designed to comply with that requirement.
Yellen said there was a “strong international law, economic and moral case” for deriving value from the Russian assets, and doing so would also incentivize Moscow to negotiate a just peace with Ukraine, which faces an estimated cost of some $486 billion to rebuild and recover.
The EU and G7 have been debating if and how these funds can be used for over a year. Two-thirds of these funds are in the EU with the majority of that held by Belgium’s clearing house Euroclear. No agreement was expected at the meeting in Brazil.
Yellen’s comments echo a call by British Prime Minister Rishi Sunak last week for “bolder” action on the Russian assets, given Ukraine’s need for more long-range weapons, drones and munitions, as well as other assistance.
Yellen said the United States and its Group of Seven allies, which imposed sanctions on hundreds of Russian targets on Friday, would continue to act to restrict Russia’s access to materials and money needed to wage its war against Ukraine.
“(Russian President Vladimir) Putin’s strategy is hoping he can simply wait out Ukraine and its allies. We must prove him wrong and show the Kremlin that we will collectively stand with Ukraine for as long as it takes,” Yellen said.
She said she fully endorsed a first step taken by the European Union to harness windfall proceeds from Russian sovereign assets, but pushed for further action.
The issue has taken on fresh importance since U.S. President Joe Biden remains at loggerheads with the leader of the Republican-led U.S. House of Representatives over efforts to approve some $61 billion in further aid to Ukraine.
Yellen again called on the House to act.
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